Bitcoin Slide Continues As Regulators Weigh In

Matthew Broersma,
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Bitcoin and other cryptocurrencies continue to slide after spectacular collapse last week of ‘stablecoin’ TerraUSD and broader market jitters

Bitcoin slumped again to below $30,000 (£24,461) on Monday, after briefly rallying over the weekend, amidst a broader selloff of crypto and other high-risk investments that began last week.

The largest cryptocurency, Bitcoin fell to around $29,600 on Monday morning, according to Coindesk, after falling as low as $25,400 last Thursday, according to Coingecko, its lowest level since December 2020.

The digital asset had risen above $30,000 over the weekend and over $31,000 in the early hours of Monday.

IoT Data analyticsBitcoin slump

The cryptocurrency has lost about one-fifth of its value so far this month, amidst investor anxiety triggered by the collapse last week of TerraUSD, a so-called stablecoin.

TerraUSD, which had attempted to peg its value to the US dollar, was trading at around 14 cents on Monday morning.

Tether, the world’s largest stablecoin, also briefly lost its 1:1 peg on 12 May, before recovering. Unlike TerraUSD Tether is backed by reserves in traditional assets, the company says.

Ether, the second-largest cryptocurrency, fell 5.6 percent to about $2,000 on Monday.

Bitcoin is down more than 50 percent from its high in November last year of $67,802.30.

Two European regulators, Bank of France governor Francois Villeroy de Galhau and Fabio Panetta, a member of the executive board of the European Central Bank, singled out stablecoins for criticism on Monday.

Stability risk

Panetta said stablecoins were vulnerable to runs, while Villeroy de Galhau told a press conference said crypto assets could disrupt the global financial system if they were not regulated in a consistent manner across jurisdictions.

He said stablecoins, which he said are somewhat misnamed, were a particular source of risk.

Some countries, such as China, have banned or are considering banning ownership and use of cryptocurrencies due to their perceived risk to economic stability.

Meanwhile Sam Bankman-Fried, founder of the digital asset exchange FTX, one of the biggest of its kind, told the Financial Times on Monday that Bitcoin has no future as a payments network because of scaling and environmental issues with its energy-intensive proof-of-work system.

“The bitcoin network is not a payments network and it is not a scaling network,” he said.